Archives for September 2014

Though his proposal to ban noncompetition agreements in Massachusetts died in the state legislature over the summer, Governor Deval Patrick still hopes to enact a state law restricting their use. This time, the Governor is seeking to more strictly regulate noncompetition contracts by requiring, among other things, that they be proposed in writing to prospective employees at the time a job offer is made.

The Governor’s push to restrict noncompetition agreements is motivated by concerns over the negative impacts they sometimes have on economic growth. “Providing the talent needed to support the kind of growth we want and need is considerably more difficult if employees are legally unable to move between jobs in the innovation economy,” the Governor wrote in a letter to legislators that accompanied his revised proposal on August 13. Once again, Mr. Patrick’s bill was referred to committee for evaluation. The Governor’s first noncompetition proposal, which sought to ban the agreements altogether while retaining employers’ abilities to protect important interests, was never acted upon by either the state senate or house of representatives.

The new bill is House 4401. In addition to delivering advance notice, it would require employers to provide employees an opportunity to consult with counsel prior to signing a noncompetition agreement. When forms are used with current employees, the proposal requires that something other than continued employment be given to them and that they have 10 business days to consider competitive restrictions before they sign them. The Governor’s bill also includes restrictions on the bases for enforcing noncompetition agreements that are consistent with current law. The modified proposal is the product of interactions with business leaders and others that the Governor engaged in after his first bill was filed.

Our client was an individual business person who operated a regional division of a large, international company. His objective was to take over ownership of the entity he managed and oversaw on his own. At the same time, the client wished to maintain close corroboration with the parent entity and continue to sell and service its software products. In order to do so, he required the formation of a new company and the creation of partnership and related agreements that would permit smooth, continuing operations. His critical objective was a seamless transition in business operations such that customers could continue to receive high quality products and services without complications during or after the transition. Achieving this goal required employees in the regional division to transfer to the new entity under our client’s supervision and management.

Result: After addressing several complexities that arose during negotiations and contract drafting, we successfully helped the client create the several contracts needed to achieve his objectives. He soon was owner of his new business, which continued its successful operations without a hitch.